- How financially fit is your non-profit organisation?
- Are its financial resources well managed?
- How healthy are your financial control systems?
This checklist will diagnose the health of your organisation's systems of financial management.
Financial Management for Non Profit Organisations
Budget News for NPOs
While some things remain the same, there was some good news for non-profit organisations in the recent 2015 Budget.
We set out, below, what we believe are the most relevant provisions for NPO’s:
- Employers and employees will, due to there being a high level of accumulated surplus in the Unemployment Insurance Fund, be able to enjoy 12 months of reduced Unemployment Insurance Fund (UIF) contributions (from a date yet to be specified). In this period, the UIF earnings threshold will be reduced to R1,000 (with no change in benefits) so the maximum contribution will drop to R10 per employee.
- The rate of income tax payable by any PBO in respect of its taxable trading income remains at 28% and the threshold above which such tax is levied remains at R200,000 (or 5% of gross income, whichever is greater).
- For individual and corporate taxpayers, donations to qualifying PBO’s are tax deductible up to 10% of taxable income; donations in excess of this are rolled over and treated as deductible donations of the following tax year.
- “Conduit” PBO’s are income tax exempt organisations that pass grants/donations on to other PBO’s. With effect from 1 March 2015, those conduit PBO’s that issue Section 18A receipts will only be required to distribute 50% of funds received for which Section 18A receipts were issued in the year (previously 75%). However, such organisations must distribute income received from their investments not later than 6 months after each period of 5 years from 1 March 2015. This will allow such conduit PBO’s to set aside more funds for longer-term financial sustainability but investment income will have to be distributed to qualifying PBO’s on a regular basis.
- The level of subsistence allowances for tax year 2016 for employees working away from their usual place of residence has been increased to R109 per day for incidental costs and R353 for meals and incidental costs. No tax is payable on reimbursements for use of a private vehicle of up to R3.18 per kilometre (2015: R3.30), if the distance travelled for business purposes does not exceed 8,000 kilometres. NOTE - this is a reduction from the prior year!
- Further developments are expected in relation to the employment tax incentives but, for the time being, they remain in force at current levels until 31st December 2016.
As a footnote, please be aware that certain enterprises (those with less than fifty employees or with turnover lower than prescribed levels) were given until the end of 2015 to submit a PAIA manual in terms of the Promotion of Access to Information Act to the South African Human Rights Commission. If you have benefitted from the exemption, please ensure that you are able to meet the deadline!
We hope that you will find these points helpful and that you will consult us if you need any further information on any of the topics raised.